Feature Financial Incentives

Does it work to pay people to live healthier lives?

BMJ 2014; 348 doi: https://doi.org/10.1136/bmj.g2458 (Published 02 April 2014) Cite this as: BMJ 2014;348:g2458
  1. Sarah Strickland, freelance journalist
  1. 1 London, UK
  1. Sarahbstrick{at}yahoo.com

With chronic diseases placing an ever growing burden on health services, governments are increasingly offering financial incentives to encourage healthier lifestyles. Sarah Strickland looks at the trends and the evidence

Although most people value good health in theory, in practice many struggle to lead healthy lives. Even knowing about the long term benefits of regular exercise, giving up smoking, and cutting back on alcohol, sugar, and fat does not necessarily lead people to make those rational choices and forgo more immediate, irrational urges.

With rates of chronic conditions such as cancer, lung disease, cardiovascular disease, and diabetes on the rise around the world (and putting increasing pressure on health services and budgets), the question of what role governments should play in steering, cajoling, or forcing the public to lead healthier lives is more pressing than ever.

“How to have people lead healthier lives is the critical question for modern public health,” says Pekka Puska, former director general of the National Institute for Health and Welfare in Finland, and now a visiting researcher there.

“You need a mix of ‘stick and carrot,’ with the carrot being education, practical services, positive incentives and so on and the stick being regulation and legislation.” Finland has been described as an “international leader” in large scale, government-led health promotion policies (box).

Some countries, including the UK, Australia, and Norway have attempted to nudge people to change their lifestyles by making subtle alterations to their social or physical environment, such as changing the layouts of buildings to encourage the use of stairs and distributing salt shakers with fewer holes free of charge to takeaway restaurants.1

Power of money

In the past few years, as populations have increasingly felt the effects of the global recession, governments have turned their attention to fiscal and cash incentives. Using financial incentives to get people to change their behaviour is nothing new (Germany has used them for years in statutory health insurance schemes), but their use seems to be rising, particularly in the US where insurance companies and employers are increasingly offering lower premiums or rewards to people who lead, or promise to lead, healthier lives.

“There is a trend away from fee-for-service financing of healthcare services and towards population health, and increased interest in both public and private sectors in using incentives to increase healthy behaviours,” said Kevin Volpp, director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania. What worries him and others is that rewards for healthy behaviour will almost inevitably lead to penalties for unhealthy behaviour, hitting lower income populations the hardest.

A 2013 healthcare survey by US consultancy Aon Hewitt2 found that 21% of 800 employers were already rewarding improved health outcomes with enhanced healthcare plans or lower payroll contributions and 67% were considering doing so. However, it also showed that 19% were penalising failure to improve and 58% were considering doing so. From this year, the US Affordable Care Act will allow employers to increase rewards and penalties from 20% to 30% of premiums, and up to 50% if smoking is included.

Volpp believes that tying incentives to pay cheques “makes the incentive dollars relatively invisible and thereby much less effective.” Smaller incentives can be equally powerful, he argues, although the bigger the better. In one study participation in a health risk assessment increased from 40% to 64% when a lottery win of up to just $125 (£75; €90) was possible compared with an increase to 44% when $50 per participant was offered.3

In the Aon Hewitt survey, 68% of employers offered some kind of incentive to improve behaviour, in the form of “health benefit design enhancements,” cash, gift vouchers, merchandise, lotteries, or raffles, with rewards for taking action commonly $50-$150 dollars but as much as $500.2 The key components of a successful financial incentive scheme are, says Volpp: “Simplicity, saliency, and relatively immediate feedback.”

Learning from low income countries

Many low income countries are familiar with the notion of cash for “good” behaviour in the form of conditional cash transfers (CCTs), a type of welfare with conditions attached that has had positive effects on children’s health. According to one report CCTs have become “the social intervention of choice” in Latin America over the past 15 years.4 Brazil boasts the largest CCT programme in the world, the Bolsa Familia, which at its height was reaching up to 25% of the population. Families must comply with certain conditions such as completion of secondary education, use of health services, and improved nutrition.

In Guatemala, however, a CCT programme was so popular it generated an increase in demand for education and health services that the government could not supply, and the scheme collapsed within a few years.5

“CCTS are long term interventions with various conditions attached and should not be confused with short-term schemes involving one-off payments,” said Timothy Powell-Jackson, lecturer in health economics at the London School of Hygiene and Tropical Medicine. He has studied one of the world’s largest examples of cash incentive schemes, the Janani Suraksha Yojana in India, in which the government pays a total of $207m a year to around 7 million women to give birth in a health facility.6 He and his coauthors found that although use of maternity services increased, there was no improvement in neonatal mortality, probably because of the poor quality of some district hospitals. Unexpected effects were also noted, such as a small increase in the rate of pregnancies and an improvement in breast feeding. Several schemes in Africa in which people are given lottery tickets or cash for not becoming infected with HIV and sexually transmitted diseases have significantly reduced cases of infection.7 8

The short term nature of cash incentives makes them popular with donors, says Powell-Jackson, but they do not tackle quality of care, which raises “serious ethical questions.”

Among higher income countries, the UK seems particularly keen on cash incentive schemes, such as Healthy Start, which offers vouchers for healthy food and “quit4u” in Scotland, which offers smokers in deprived areas £12.50 a week in food vouchers if they stop smoking. A much publicised study at Sheffield University is currently experimenting with paying mothers in low income areas to breast feed, based on a similar scheme in Quebec, Canada, where women are offered $55 a month to breast feed.

In 2007 the King’s Fund,9 a UK health think tank, reviewed 32 incentive schemes mainly in the US but also in Europe and Australia dating as far back as 1973 for a range of behaviours including exercise, sexual health, diet, medication adherence, and smoking. Incentives included cash, gift certificates, shopping vouchers, lotteries, T shirts, stickers (for children), leisure centre vouchers, and even luxury goods and holidays.

More controversial schemes include paying drug users or pregnant smokers to abstain and teenage girls not to get pregnant again within two years. In 2010, a US charity that pays drug users to use long term birth control or be sterilised began operating in the UK.10

“Some people say it’s a disgrace, and they shouldn’t be given money,” said Theresa Marteau, director of the Behaviour and Health Research Unit at the University of Cambridge. But a study she coauthored in 2012 found that the acceptability of incentive schemes grew with effectiveness and depended on the behaviour targeted and the type of incentive, with grocery vouchers more acceptable than cash.11 “People’s views on incentives shifted as they heard about them,” she explained. “People were prepared to trade-off rewarding bad behaviour where there was a benefit and they could see that in the end, it was going to save the taxpayer money. By stopping a pregnant girl smoking, you stop another negative cycle from starting.”

What about the longer term?

While many incentive schemes have proved effective, it is the long term maintenance of those effects that researchers are now questioning. Cash incentives have been shown to significantly increase rates of smoking cessation, for example, and to encourage weight loss, but relapse rates are disappointing.12

In a yet to be published review of 39 studies, most assessing smoking, Marteau and colleagues found that although incentives did increase behaviour change, their role was potentially limited because the effects wear off three months after the incentive ceases. The King’s Fund report reached a similar conclusion, suggesting that incentives are effective “in limited circumstances where the tasks are simple and time limited” and less so where “the behaviour change required is complex.”9

How Finland went from fat to fit

In the 1970s Finland had the highest rates of heart disease in the world. “Everybody was smoking and eating a lot of fat . . . people simply did not eat vegetables,” writes Pekka Puska.13 In 1972 he worked on the North Keralia project, a “massive community based intervention” that combined positive incentives with “sweeping nationwide changes in legislation” and was eventually rolled out across the entire country. Tobacco advertising was banned and agricultural subsidies for high fat products were replaced with financial incentives linked instead to protein content, encouraging farmers to produce low fat milk and rapeseed oil. Incentives were also used to promote the cultivation of vegetables and berries.

The approach not only worked but achieved long lasting results. By 1995, deaths from cardiovascular disease among all men in Finland had fallen by 65% and lung cancer mortality by almost 60%.14 Finland now boasts one of the lowest rates of smoking in the world.

Interestingly, telling people what to do was not a priority during the campaign. “It wasn’t education they needed, it was motivation,” writes Puska.13 “We blitzed the population with positive incentives.” Smokers competed in village “quit and win” competitions with prizes and whole towns vied against each other in cholesterol cutting contests with the winning towns receiving a collective prize.


Cite this as: BMJ 2014;348:g2458


  • Competing interests: I have read and understood the BMJ Group policy on declaration of interests and have no relevant interests to declare.

  • Provenance and peer review: Commissioned; not externally peer reviewed.


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